Bank Of America Initiates Brocade Communications At Buy; Cites Near-Term Catalysts Despite Secular Headwinds

The company is the leader in networking solutions Storage Area Networks (SAN) and provides networking products for campuses, data centers and service provider environments.

Llani understands that there are strong "secular headwinds," but sees many "near term catalysts for the stock." In Llani's view, "The street is not accurately modeling the earnings potential of the Ruckus acquisition."

Related Link: Wunderlich Downgrades Brocade, Spooked By Guidance

He sees a potential 10 percent upside for the EPS once the deal closes. The company is also set to release multiple SAN and switching products, which will generate over 87 percent of product revenues. The analyst also sees headwinds easing in the future, as new relationships in the SDN and NFV markets form.

The "key risk factor" for BRCD's "secular headwinds" is the decline of primary business of Fiber Channel Storage Area Networking that accounted for 70 percent of its 2015 revenue.

At time of writing, shares of Brocade Communications were trading up 2.18 percent at $8.19.